nep-ltv New Economics Papers
on Unemployment, Inequality and Poverty
Issue of 2014‒12‒24
nine papers chosen by
Maximo Rossi
Universidad de la República

  1. Adaptation to Poverty in Long-Run Panel Data By Clark, Andrew E.; D'Ambrosio, Conchita; Ghislandi, Simone
  2. Trust and the Welfare State: the Twin Peaks Curve By Algan, Yann; Cahuc, Pierre; Sangnier, Marc
  3. Returns to Skills Around the World: Evidence From PIAAC By Eric A. Hanushek; Guido Schwerdt; Simon Wiederhold; Ludger Woessmann
  4. Great opportunities or poor alternatives: self-employment, unemployment and paid employment over the business cycle By Ludo Visschers; Ana Millan; Matthias Kredler
  5. How far away is a Single European Labor Market? By Krause, Annabelle; Rinne, Ulf; Zimmermann, Klaus F
  6. The Emotional Consequences of Donation Opportunities By Lara B. Aknin; Guy Mayraz; John F. Helliwell
  7. The contribution of income mobility to economic insecurity in the US and Spain during the Great Recession By Olga Canto; David O. Ruiz
  8. Cannabis Use and its Effects on Health, Education and Labor Market Success By van Ours, J.C.; Williams, J.
  9. Wealth Inequality in the United States since 1913: Evidence from Capitalized Income Tax Data By Saez, Emmanuel; Zucman, Gabriel

  1. By: Clark, Andrew E. (Paris School of Economics); D'Ambrosio, Conchita (University of Luxembourg); Ghislandi, Simone (Bocconi University)
    Abstract: We consider the link between poverty and subjective well-being, and focus in particular on potential adaptation to poverty. We use panel data on almost 54,000 individuals living in Germany from 1985 to 2012 to show first that life satisfaction falls with both the incidence and intensity of contemporaneous poverty. We then reveal that there is little evidence of adaptation within a poverty spell: poverty starts bad and stays bad in terms of subjective well-being. We cannot identify any cause of poverty entry which explains the overall lack of poverty adaptation.
    Keywords: income, poverty, subjective well-being, adaptation, SOEP
    JEL: I31 D60
    Date: 2014–11
  2. By: Algan, Yann; Cahuc, Pierre; Sangnier, Marc
    Abstract: We show the existence of a twin peaks relation between trust and the size of the welfare state that stems from two opposing forces. Uncivic people support large welfare states because they expect to benefit from them without bearing their costs. But civic individuals support generous benefits and high taxes only when they are surrounded by trustworthy individuals. We provide empirical evidence for these behaviors and this twin peaks relation in the OECD countries.
    Keywords: trust; welfare states
    JEL: H1
    Date: 2014–07
  3. By: Eric A. Hanushek; Guido Schwerdt; Simon Wiederhold; Ludger Woessmann
    Abstract: This paper updates estimations of labor-market returns to human capital by re-examining traditional measures that rely exclusively on school attainment and put too much weight on early-career earnings by incorporating adult skills over full lifecycle earnings in 22 countries.
    Date: 2013–12
  4. By: Ludo Visschers (Universidad Carlos III, Madrid and University of Edinburgh); Ana Millan (Universidad Carlos III de Madrid); Matthias Kredler (Universidad Carlos III Madrid)
    Abstract: In this paper, we study the flows between self-employment, unemployment and paid employment, and how these vary over the business cycle. First, we document these flows in the data, paying particular attention to previous labor market outcomes for workers entering self-employment, and subsequent labor market outcomes for those leaving self-employment, and how these are affected by cyclical conditions. Second, we construct a two-ladder equilibrium model of a frictional labor market capturing these flows: workers search both on and off the job, and receive business ideas while in any of the three states: self-, paid employment and unemployment. We study this model in an environment with aggregate shocks, which affect both the productivity of matches in the paid-employment sector, and the profitability of ideas for the self-employed. Third, we (plan to) calibrate to see how well it can quantitatively account for observed patterns over the business cycle. These allow us to have a notion of entry into self- employment by "opportunity" (highly profitable ideas), and "necessity" (lack of alternatives in paid employment), and how these vary over the business cycle, and to quantify "prosperity pull" of self-employment in good times, and "recession push" in bad times. Finally, we plan to study the impact of labor market policies on self-employment, and on unemployment, taking into account the option to enter self-employment.
    Date: 2014
  5. By: Krause, Annabelle; Rinne, Ulf; Zimmermann, Klaus F
    Abstract: A Single European Labor Market, particularly involving the free movement of workers within Europe, has been a goal of the European community since the 1950s. Whereas it may entail opportunities and drawbacks alike, the benefits—such as greater economic welfare for most citizens—are supposed to outweigh the losses. However, over fifty years after the aim was first established, a Single European Labor Market has not yet been achieved. This paper gives an overview of current European macroeconomic trends, with a particular focus on the Great Recession, and also explores the drivers of and obstacles to labor mobility. Complementarily, it analyses the results of a unique opinion survey among labor market experts, as well as formulates policy recommendations to enhance mobility. The development of a Single European Labor Market is also discussed in relation to the German model.
    Keywords: economic crisis; economic migration; European labor market integration; German model; worker mobility
    JEL: J40 J61 J68
    Date: 2014–08
  6. By: Lara B. Aknin; Guy Mayraz; John F. Helliwell
    Abstract: Charities often circulate widespread donation appeals to garner support for campaigns, but what impact do these campaigns have on the well-being of individuals who choose to donate, those who choose not to donate, and the entire group exposed to the campaign? Here we investigate these questions by exploring the changes in affect reported by individuals who donate in response to a charitable request and those who do not. We also look at the change in affect reported by the entire sample to measure the net impact of the donation request. Results reveal that large donors experience hedonic boosts from their charitable actions, and the substantial fraction of large donors translates to a net positive influence on the well-being of the entire sample. Thus, under certain conditions, donation opportunities can enable people to help others while also increasing the overall well-being of the population of potential donors.
    JEL: C91 D60 D64 H3
    Date: 2014–11
  7. By: Olga Canto (Departamento de Economia, Facultad de Economicas, Empresariales y Turismo, Universidad de Alcala, Spain); David O. Ruiz (Departamento de Economia, Facultad de Ciencias Sociales y Economicas, Universidad del Valle, Ciudad Universitaria Meléndez, Colombia)
    Abstract: Recent evidence on the impact of the crisis on developed countries shows that the changes in income inequality and poverty have been relatively small in spite of the macroeconomic heterogeneity of the recession across different economies. However, when evaluating the main changes in individual perceptions linked to the crisis not only increases in inequality or poverty matter, also changes in individually-perceived chances to scale up or lose ground in the income ladder are crucial. Our aim is to analyze to what extent the recession may have had an impact on economic insecurity perceptions by increasing income losses in two developed countries where job losses have been large. The contribution of income losses to insecurity is approximated by the prevalence of downward income mobility. We identify the main socioeconomic characteristics of those most likely to suffer from a large income loss. In general, age, education and the presence of children in the household are key determinants of this event in both countries.
    Keywords: Mobility, economic insecurity, income volatility, recession, US, Spain.
    JEL: D31 D63 I14
    Date: 2014–10
  8. By: van Ours, J.C. (Tilburg University, Center For Economic Research); Williams, J. (Tilburg University, Center For Economic Research)
    Abstract: Cannabis is the most popular illegal drug. Its legal status is typically justified on the grounds that cannabis use has harmful consequences. Empirically investigating this issue has been a fertile topic for research in recent times. We provide an overview of this literature, focusing on studies which seek to establish the causal eect of cannabis use on health, education and labor market success. We conclude that there do not appear to be serious harmful health eects of moderate cannabis use. Nevertheless, there is evidence of reduced mental well-being for heavy users who are susceptible to mental health problems. While there is robust evidence that early cannabis use reduces educational attainment, there remains substantial uncertainty as to whether using cannabis has adverse labor market eects.
    Keywords: Cannabis use; Health; Education; Labor market
    Date: 2014
  9. By: Saez, Emmanuel; Zucman, Gabriel
    Abstract: This paper combines income tax returns with Flow of Funds data to estimate the distribution of household wealth in the United States since 1913. We estimate wealth by capitalizing the incomes reported by individual taxpayers, accounting for assets that do not generate taxable income. We successfully test our capitalization method in three micro datasets where we can observe both income and wealth: the Survey of Consumer Finance, linked estate and income tax returns, and foundations' tax records. Wealth concentration has followed a U-shaped evolution over the last 100 years: It was high in the beginning of the twentieth century, fell from 1929 to 1978, and has continuously increased since then. The rise of wealth inequality is almost entirely due to the rise of the top 0.1% wealth share, from 7% in 1979 to 22% in 2012---a level almost as high as in 1929. The bottom 90% wealth share first increased up to the mid-1980s and then steadily declined. The increase in wealth concentration is due to the surge of top incomes combined with an increase in saving rate inequality. Top wealth-holders are younger today than in the 1960s and earn a higher fraction of total labor income in the economy. We explain how our findings can be reconciled with Survey of Consumer Finances and estate tax data.
    Keywords: household wealth; income tax; wealth inequality; wealth-holders
    JEL: H2 N32
    Date: 2014–10

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